Short answer. In a general partnership, all partners are personally liable without limit for the partnership's debts. In a limited partnership, some partners have liability capped at their contributions — but there must be at least one general partner who remains personally and fully liable for the firm's obligations.
What the law says
As regards the liability of the partners, a partnership may be general or limited.
Civil Code, Article 1776 — Classes of Partnership. Read the full provision →
Two kinds of partnership as to liability
Article 1776 of the Civil Code identifies the two categories of partnership based on the extent of the partners' liability: As regards the liability of the partners, a partnership may be general or limited. The article also notes that as to its object, a partnership may be universal or particular — but the liability classification is what most people asking this question need to understand. The choice between general and limited has major consequences for each partner's personal exposure to the firm's debts.
General partnership: unlimited personal liability
In a general partnership, every partner is personally and solidarily liable for all the debts and obligations of the partnership after the firm's assets are exhausted. This means creditors who cannot collect from partnership property can pursue the personal assets of any or all of the partners. The liability is not capped at a partner's investment or capital contribution. A partner who contributed only a small share may end up paying debts that far exceed what they put in. The unlimited liability of general partners is the defining risk of this form of business organization.
Limited partnership: capped liability for limited partners
A limited partnership has at least two types of partners. General partners bear unlimited personal liability, the same as in a general partnership. Limited partners, by contrast, are liable only to the extent of their capital contributions — they cannot be made to pay partnership debts from their personal assets beyond what they agreed to put in. In exchange for this protection, limited partners give up the right to manage the partnership's business. A limited partner who actively participates in management may lose their limited liability status.
Formality and registration
A limited partnership must be constituted in a public instrument — a notarized agreement — and registered with the Securities and Exchange Commission. The registration gives public notice that some partners have limited liability, which is information creditors and third parties are entitled to have before dealing with the firm. A general partnership, by contrast, may be formed without any particular formality unless immovable property is contributed. If a partnership fails to comply with the formalities required for a limited partnership, all partners may be treated as general partners with unlimited liability.